Chapter

Reparations and Microfinance Schemes

Hans Dieter Seibel and Andrea Armstrong

in The Handbook of Reparations

Published in print March 2006 | ISBN: 9780199291922
Published online May 2006 | e-ISBN: 9780191603716 | DOI: http://dx.doi.org/10.1093/0199291926.003.0021
Reparations and Microfinance Schemes

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Allocating reparation benefits to victims of civil rights abuses with a lasting effect on their well-being is a tremendous challenge. By converting benefit payments into shares and beneficiaries into shareholders of microfinance institutions (MFIs), the former victims become active partners of aid and owners of local institutions. In many countries, indigenous savings and credit associations are the only civil society institutions which have survived the breakdown of society, representing the social capital for the reconstruction of local financial institutions. In other countries, such institutions have to be newly built. In either case, experienced international NGOs may be instrumental in building or reconstructing MFIs owned by recipients of reparation payments. Part of the funding in a reparation program may thus be allocated directly to the victims-turned-shareholders, the other part to institution-building. Based on satisfactory performance of the MFI, the share capital may be augmented by donor grants and bank borrowings to increase the volume of loans to the user-owners for income-generating activities. In terms of sustainable impact, there is no alternative to institution-building.

Keywords: civil rights; benefit payments; microfinance institutions; reparations program; institution-building

Chapter.  9330 words. 

Subjects: International Relations

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